Tencent's Hong Kong stock has risen around 95% since October 28 and Alibaba's stock is up about 85% over a similar period, as China relaxes its tech crackdown
Shares of Tencent Holdings Ltd. have nearly doubled from their recent lows on growing signs that China is preparing to end …
Context & Ripple Effects
Tencent and Alibaba spent two years as the emblem of China's tech crackdown: by August 2022 they had fallen 60% and 65% respectively since February 2021, the largest market-value destruction of any stocks globally, per Bloomberg's analysis of their drawdown. The selling was driven by regulatory fear itself — Tencent alone shed 5.2% in a single day in February 2022 during what was then the sector's worst two-day drop since July 2021, on rumors of impending crackdowns (that February 2022 selloff).
This report marks the turn: with Hong Kong-listed Tencent up around 95% and Alibaba up about 85% since October 28, the same policy lever that crushed the stocks is now being read as reversing, making Beijing's regulatory posture — not earnings — the dominant variable in Chinese tech valuations.
First-order effects
- Investors who held Tencent and Alibaba through the crackdown-era trough have recovered most of their losses in under three months, restoring tens of billions in combined market value that had made the pair the world's biggest stock-market losers.
- The rally reprices risk for every foreign fund that wrote off Chinese internet platforms as uninvestable, forcing portfolio managers to rebuild positions in the two largest names at rapidly rising prices.
Second-order effects
- Other Chinese platform companies and their suppliers gain a valuation tailwind as the crackdown-relaxation trade spreads beyond Tencent and Alibaba, reopening paths for listings and fundraising that regulatory fear had frozen.
- Global allocators face a forced rebalancing: money that rotated out of Chinese tech into US and Indian peers now competes against a rebounding Hong Kong complex, pressuring relative valuations across emerging-market tech portfolios.
Third-order effects
- If the pattern holds, Chinese tech equities become structurally policy-cyclical assets — priced off signals from regulators rather than cash flows — which is exactly how the later arc reads: the Hang Seng Tech Index, home to both companies, fell 28% from October 2025 amid renewed pressure (the index's subsequent slide) even as AI-supply-chain names rallied separately.
- That boom-bust cadence pushes long-term capital toward demanding a persistent regulatory-risk discount on Chinese platforms, reshaping how Tencent and Alibaba are valued relative to US peers regardless of fundamentals.
The trend: Chinese tech valuations are increasingly set by the direction of Beijing's regulatory stance rather than company performance, producing sharp policy-driven swings in both directions.